In the first of a new series of blogs discussing Schneider Electric’s approach to Responsible and Responsive real estate, we talk to Juliette Medana from JLL about reducing carbon emissions
Tackling carbon emissions in real estate has become a “race against the clock” for landlords and occupiers, according to the latest expert findings. “We have a global consensus that carbon emissions are triggering catastrophic and irrevocable climate change,” says Cormac Crossan, global business development lead for commercial real estate at Schneider Electric. “Increasing global temperatures will undeniably have devastating effects on the current ecosystem and biosphere, making joint action essential.”
We have a global consensus that carbon emissions are triggering catastrophic and irrevocable climate change – Cormac Crossan, Schneider Electric
While there are signs of collective effort, from the Paris pledge to the emergence of tools such as the carbon risk real estate monitor (CRREM), Cormac notes that individual businesses have a huge role to play. “A great deal of the pressure and momentum behind ESG and the climate emergency is filtered through governments, but it’s a now a very real and tangible risk factor for corporations, who occupy the lion’s share of real estate,” he notes.
The latest data speaks for itself. While buildings account for 37% of global CO2 emissions, some 90% of properties will become a financial risk if they fail to decarbonise. Stranded assets risk seeing their value fall by an average of 30%, according to data compiled by Schneider Electric. Moving forward, some 50,000 companies in Europe will need to disclose their energy and carbon figures under the Corporate Sustainability Reporting Directive (CSRD), a regulatory framework established by the European Commission.
Faced with navigating an increasingly complex environmental, social, and governance (ESG) environment, expert partners are stepping into the breach.
Juliette Medana, head of sustainability consulting EMEA at JLL, sees an opportunity to use the lever of regulation to achieve positive change (click to watch the recording of the MIPIM session). “We are still in a very complex environment, but we see progressive alignment at a global level with global standards,” she notes. “Meanwhile, at a national and city level, we are seeing more and more regulation around businesses and building performance, that place pressure on investors but progressively also on occupiers,” she notes. Against this, macroeconomic headwinds are clouding the picture. She points out that “barriers to improvement” have included the high interest rate environment of recent years and low capital market activity.
We are still in a very complex environment, but we see progressive alignment at a global level with global standards – Juliette Medana, JLL
“The good news is that if you look at the global commitment, it’s now moving at scale,” she adds. ”Some 66% of Fortune 500 companies have committed to climate change, and this is translating not only to their core business activities, but also to their real estate portfolios, with ESG performance requirements progressively being integrated much more.”
This in turn is having a very real impact on leasing markets, she notes. “In 2025, we have calculated that 30% of the demand for low carbon buildings by corporates will not be met.” The market is being undersupplied due to the current pace of retrofit, which is about 1% each year, she explains. “Looking to 2030, that current rate of retrofit will create a 70% gap in supply and demand. So, this is a tipping point, signalling to investors a potential value shift and change in asset liquidity as corporate location strategy progressively integrates this requirement. Ultimately, it creates a shared incentive between investor and occupier to take action.”
Mike Kazmierczak, CMO digital energy, Schneider Electric, adds: “Some 50% of the buildings that exist today will exist in 2050, which is a huge opportunity to act now. 2050 is also the date and target for most organisations’ net zero ambitions. This is a motivation to act fast, starting with existing buildings which represent a huge amount of emissions, both embodied and operational.”
Some 50% of the buildings that exist today will exist in 2050, which is a huge opportunity to act now – Mike Kazmierczak, Schneider Electric
According to Mike, retrofitting generates about half the emissions of a new build construction, and about one sixth of the emissions of an existing property. “That means huge potential to look at existing stock, and see how we can help our customers renovate with sustainability in mind,” he notes. “We also need to think about how to accelerate in this area. Because we need to go about three times faster to hit 2050 targets.”
A key tool in the battle is technology, which implies low upfront carbon emissions, and an opportunity to get a quicker return on investment, compared to a deeper renovation. In fact, Mike suggests that light interventions for compliance, or medium retrofits, essentially looking at electrification and renewables, are often the most cost- and time-effective route. Deeper renovations, which usually tackle the envelope of the building and can only be done in the absence of tenants, are slower and more disruptive, implying a lower return on investment.
“Some 42% of operational emissions can be reduced by just taking the first steps of light interventions,” he explains. “That means looking at building management systems and power management systems, addressing energy consumption and monitoring, before you get into the next phase of looking at how you manage that to decrease emissions.”
He adds: “Medium retrofits add another 28% of reduction in emissions, which gets us to 70% total emissions that can be reduced through technology alone.”
Notes Juliette: “What is key to understand is that there is no one solution for all. You have to go building by building, examining what the materials are and what systems are in place to determine the proper renovation to move forward.”
Adds Mike: “Getting started today with a quick return on investment and finding the right partner is extremely important, to help you progress on that journey. You have to identify the right assets to tackle, and then move forward on building the action plan and the solutions that will help with reducing the emissions.”
All this is part of a wider, holistic approach to sustainability in the built environment, which Schneider Electric calls “responsible and responsive real estate”. Says Cormac: “Being responsible is something that we can all understand and get on board with. Across real estate there are common goals around driving down energy consumption, to use less carbon, report better on what we do, and with carefully curated data, be able to justify what we’re doing and in turn tackle commitments. Responsive real estate is about achieving portfolios that can respond to adverse conditions in the environment. It’s also an aspect of resilience in the face of climate change, and can include approaches to energy security or cyber security.” He concludes: “We can do all this and more with digital technology, to enable positive outcomes in real estate.”
Schneider Electric: Enabling Responsible and Responsive Real Estate
The real estate sector faces the urgent challenge of minimising its carbon footprint to comply with government regulations, reduce operational costs, and satisfy the evolving needs of occupants and stakeholders. Download our eGuide to explore how our solutions deliver real impact for our customers across key focus areas: sustainability acceleration, energy management, asset performance and operations, user experience and portfolio strategy. Find out more about Schneider Electric here.
